Will London's ULEZ trigger electric sales?
The Ultra Low Emission Zone, or ULEZ, came into force in central London in April 2019. Its introduction served as high profile confirmation of the UK Government’s aim to transition to zero emission road transport by 2040, as outlined in its Road to Zero strategy.
The ULEZ, which is intended to discourage the use of older more polluting vehicles, is open 24/7 and occupies central London’s Congestion Charge Zone. Vehicle compliancy is based on emission levels with a £12.50 daily charge levied on pre Euro 6 diesel cars and pre Euro 4 petrol cars. Vehicles entering the ULEZ also face the daily £11.50 Congestion Charge.
Figures released by Transport for London, which administers the scheme, shows it is working with the percentage of compliant vehicles rising from 61% in March to 72.5% in July. This equates to around 12,500 fewer non-compliant vehicles entering the zone since its introduction.
London has bold plans for the ULEZ with an extension planned in October 2025 which will see it expand to the North and South Circular ring roads.
So what does this all mean for car buyers, especially ULEZ residents who will be liable for the charge from 2021?
Diesel’s days could be numbered, as Euro 6 only became mandatory on new cars in 2015. But, there is a massive opportunity for dealers to sell electric vehicles (EVs) and hybrids, collectively classified as Alternatively Fuelled Vehicles (AFVs) in and around the capital.
Ultimately, searches for petrol cars in London have increased and so have their sales. However, with carmakers increasing the rollout of electrification across their model line-ups, the ULEZ presents an opportunity to ramp up sales of new AFVs.
In the first nine months of this year EVs accounted for just 1.1% of all new car registrations, PHEVs (Plug-in Hybrid Electric Vehicles) 1.2% and hybrids 4%. There is plenty of room for growth.
Recent research from LV= General Insurance, one of the UK’s largest car insurers, found 74% of London drivers would consider an EV when replacing one of their current cars. With the expanded ULEZ, buying an EV could become the best way for many to future-proof their next car purchase.
Dealers around and inside the M25 are ideally positioned to benefit from this inevitable shift. So too are retailers in Birmingham, Derby, Leeds, Nottingham and Southampton, where the next ULEZs will be located.
We know car buyers are turning away from new diesels and online searches for used diesels are gradually declining but interest in AFVs, especially EVs, is rising.
While franchised dealers are ideally positioned to reap the benefits of selling new EVs, independents are finding rising interest as these vehicles start to enter the used sector in greater numbers.
Expansion of the London ULEZ and the rollout of others could prove to be the trigger needed to boost demand for new and used EVs.